Question: Use the Figure below that shows the net present value profile of two projects Y and W to answer the following questions: show your work:

Use the Figure below that shows the net present value profile of two projects Y and W to answer the following questions: show your work:

If the two projects are mutually exclusive, over what discount rate range(s) would project Y be preferred to project W? Why? (2 marks)

If the two projects are independent and the discount rate is less than 26%, what decision should the firm make? Why? (2 marks)

If the two projects are mutually exclusive and the discount rate is greater than 2%, what decision should the firm make? Why? (2 marks).

Use the Figure below that shows the net present value profile of

NPV Profiles 7000.00 6000.00 5000.00 4000.00 -NPV(W) ---NPVY) 3000.00 2000.00 Net Present Value 1000.00 0.00 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% -1000.00 -2000.00 -3000.00 -4000.00 -5000.00 Discount Rate

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=+ b. What can you infer about the expected change in the exchange rate between the Canadian dollar and the U.S. dollar?

=+ d. What happens to Oceanias trade balance?

=+ e. What happens to Oceanias real exchange rate?